Nike 2004 annual report create an SBU analysis. Where would you increase investments, maintain inves

Nike 2004 annual report create an SBU analysis. Where would you increase investments, maintain investments, divest investments.
Exhibit 2 Nike's Financial Statements 2002 100.0 2004 12.253.10 7.001.40 5.251.70 3.702.00 25.00 74.70 In Millions 2003 2002 10,697.00 9.893.00 6.313.60 6.00470 4.383.40 3.888.30 3.154.10 2.835.80 28.80 4.00 77450 120 29 Nike, Inc. Consolidated Statements of Income For Period Ended May 31, 2004 Revenues Cost of sales Gross Margin Selling and administrative Interest expense, net Other expense, net Income before income taxes and cumulative effect of accounting change Income taxes Income before cumulative effect of accounting change Cumulative effect of accounting change. net of income taxes of (S-, S- and $3.0) Net income Basic earnings per common share before accounting change Cumulative effect of accounting change CONS 2001 2003 100.0 100.0 S21 410 30.2 02 06 11.8 1,450.00 504.40 1.123.00 _382.90 1,017,30 349.00 945.60 740.10 668.30 945.60 266.10 474.00 663.10 2.80 LOL 1.72 248 Diluted earnings per common share before accounting change Cumulative effect of accounting change 246 “Change in the method of accounting for goodwill Source: Thompson One Bank Anahri. Exhibit 2 Nike's Financial Statements (continued) In Millions 2004 2003 828.00 400.80 634.00 10.49 9.29 5. og 3055 287 20.70 2.09 2,120.20 2,083.90 1,633.60 1.514.90 165.00 221.80 164.40 332,50 5.512.00 4.787.10 1,586.901.620.80 366.10 18.20 135.40 65.60 291.00 229.40 7,891,60 6,821.10 69,85 20.11 70.18 23.76 4.64 1.73 0.96 1.72 3.69 100.00 10.02 102 Nike, Inc. Consolidated Balance Sheet For Period Ended May 31, 2004 Current Assets Cash and equivalents Short-term investments Accounts receivable, less allowance for doubtful accounts of $95.3 and $81.9 Inventories Deferred income taxes Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Identifiable intangible assets, net Goodwill (Note 4) Deferred income taxes and other assets Total assets Current Liabilities: Current portion of long-term debe Notes payable Accounts payable Accrued liabilities Income taxes payable Total current liabilities Long-term debe Deferred income taxes and other liabilities Commitments and contingencies Redeemable Preferred Stock Shareholders' Equity: Common Stock at stated value: Class A convertible-77.6 and 97.8 shares outstanding Class B – 185.5 and 165.8 shares outstanding Capital in excess of stated value Unearned stock compensation Accumulated other comprehensive loss Retained earnings Total shareholders equiry Total liabilities and shareholders' equiry 6.60 146.00 763.80 974.40 118.20 2.009.00 682.40 418.20 205.70 75.40 572.70 1,046,20 130.60 2.020.60 551.60 257.90 0.08 85 9.68 1235 1.50 25.46 8.65 5.30 II 840 15.19 1.91 8.09 30 0.300.30 0.00 0.00 0.00 00 0.100 .20 2.70 2.60 887.80 589.00 (5.50) (0.60) (86.30) 239.70) 3.982.99 3.639.20 4.781.70 3.990.70 7.891.60 6.821.10 0.00 003 11.25 (007) (1.09) 507 62.59 100.00 &63 (0.01) 3.50 5235 5851 100.02 Source: Theme Our Becker Exhibit 2 Nike's Financial Statements (continued 2003 2002 474.00 5.00 266.10 239.30 55.00 23.20 12.50 223.50 15.90 48.10 13.90 (136.30) (102.80) 60.90 30.10 922.00 (135.20) 55.40 16,90 175.40 1,082.20 Nike, Inc. Consolidated Statements of Cash Flows In Millions for Period Ended May 31, 2004 2004 Cash provided (used) by operations: Not income 945.60 Income charges not affecting cash: Cumulative effect of accounting change Depreciation 252.10 Deferred income taxes 19.00 Amortization and other 58 10 Income tax benefit from exercise of stock options 47.20 Changes in certain working capital components: Decrease increase) in accounts receivable 82.50 (Increase) decrease in inventories (55.90) (Increase) decrease in prepaids and other current assets (103.50) Increase in accounts payable, accrued liabilities and income taxes payable 209.10 Cash provided by operations 1,514.40 Cash provided (used) by investing activities: Purchases of short-term investments (400.80) Additions to property, plant and equipment and other (213.90) Disposals of property, plant and equipment 11.60 Increase in other assets (53.40) (Decrease) increase in other liabilities (0.90) Acquisition of subsidiary, net of cash acquired (289.10) Cash used by investing activities (946.50) Cash provided (used) by financing activities: Proceeds from long-term debe issuance 153.80 Reductions in long-term debe including current portion (206,60) Decrease in notes payable (0.30) Proceeds from exercise of stock options and other stock issuances 253.60 Repurchase of stock (419.80) Dividends – common and preferred (179.201 Cash used by financing activities (398.50) Effect of exchange rate changes Net increase in cash and equivalents 194.00 Cash and equivalents, beginning of year 634.00 Cash and equivalents, end of year 828.00 (185.90) 14.80 (46.30) 1.80 (282.80) 15.60 (28.70) (6.90) (215.60) (302.80) 90.40 055.90) (351.10) 44.20 (196.30) (1.37.80) (606.50) A140) 58.50 575.50 634.00 329.90 (80.30) (433.10) 59.50 (226.90) (128.90 (479.80) 128.10 271.50 304.00 575.50 Source: Thompson Owe Buk alytic. Exhibit 3 Selected Financial Ratios for Nike and Reebok 5104 5/03 NIKE, INC. /02 501 5/005/99 12/03 2.166 3.051 REEBOK INTERNATIONAL LTD 12/02 12/01 12700 1279912198 1.835 1.773 1.419 2.134 286 2.782 2.881 2.510 2.017 2.512 1.667 1.345 1.298 1.078 0.852 1.201 2744 2.369 2.266 2.029 1.681 2.256 63.157 71.106 66.562 62.9 63.683 64.047 85.164 87.579 83.507 89.854 97.670 77.777 39.155 32.385 30.919 27.261 .950 27.389 1.553 1.568 1.536 1.630 1.536 1.673 55.747 49.215 46755 53.991 52.538 58.615 59.956 73.576 69.923 80.724 8.833 95.872 27.096 30.832 2.527 35.7053.79 28822 1.752 1.681 1.939 1.958 1.854 1.914 0.087 0.111 0.106 0.076 0.089 0.074 0.144 0.190 0.177 0.126 0.166 0.116 59.000 39.993 30.921 16.697 21.427 17.918 0.178 0342 0.190 0.228 0.4000-488 0.245 0590 0,355 1.050 0. .185 FISCAL YEAR ENDING LIQUIDITY Acid Test Ratio Current Ratio ASSET MANAGEMENT. Days Receivable Day's Inventory Day's Payable Asset Tumover FINANCIAL LEVERAGE Long-term Debt to Total Assets Long-term Debt to Stockholders' Equity Interest Coverage Ratio PROFTTABILITY Gross Margin Ratio Return on Sales Return on Assets (Net Income Total Assets) Return on Assets (Net Income. Interest Expense) Total Assets Return on Ending Equity DUPONT ANALYSIS Return on Beginning Equity Return on Sales (NI/Sales) Asset Tumover (Sales/Assets) “Leverage (Assets/Beg. SE **Based on 365 days per year and ending balances. Source: Thompson One Banker Anahtar 0.429 0.077 0.120 0.410 0.014 0.069 0.393 0.067 0.103 0.90 0,062 0.101 0.399 0.374 0.064 0051 0.099 0086 0 8 0.384 0.045 0.079 0. 3 0.040 0.068 0.367 0.034 0.067 0379 0.028 0.055 0.385 0.004 0.007 0.123 0.198 0,074 0.119 0.1080.1110.107 0.094 0.173 0.169 0.185 0135 0.092 0.152 0.081 0.087 0.081 0033 0.143 01430133 0.021 0,04 0.014 0.237 0.077 1.553 1.977 0.123 0.044 1.568 1.777 0.190 0.067 1.536 1.843 0.1880 .174 0.062 0.064 1.630 1.536 1.856 1.756 0.051 1.673 w 0.178 0.176 0.169 0153 0010 0.045 0.00 0.034 0028 0.004 752 .681 .919 958 7,854 229 2585 219 278 2.92 A 0.007 ,914 Exhibit 4 Selected Historical Data for Nike and Competitors Nike, Inc. (MILLIONS OF DOLLARS) FISCAL YEAR ENDING 5/31/04 5/31/03 5/31/02 NET CALES 12.253.10 10,697.00 9.893.00 Sales Growth 145 815 4.3 GROSS PROFIT 5.251.70 4.383.40 3.888.30 Gross Profit Percentage 4299 410 39.3% OPERATING INCOME 1,549.70 1.229 30 1.052.50 Operating Income Percentage 106 NET INCOME 945.60 474.00 66330 Return on Sales 7.7% 4,4% 6.79 Rerum on Assets 12.0% 6.9% 10.3% Return on Equity 19.8% 11.9% 17.3% CASH FLOW FROM OPERATIONS 1,514.40 922.00 1,082 20 CASH FLOWS FROM INVESTING 946.50 -215.60 -302.80 5/31/01 5/31/005/31/99 9.488.80 8.995.10 8.776.90 5.5% 2.5% 81% 3.703.90 3.591.30 3.283.40 39.0 39.9 37.4% 1,014,20 954.90 856.80 107 10.9 9.84 589.70 579.10 451.40 6 .29 6.495 .19 10.1% 9.9% 8.6 16.9 18.5% 656.50 6.99.60 961.00 -342.30 440.00 416.50 adidas-SALOMON AG (MILLIONS OF EUROS) FISCAL YEAR ENDING NET SALES Sales Growth GROSS PROFIT Gross Profit Percentage OPERATING INCOME Operating Income Percentage NET INCOME Return on Sales Return on Assets Return on Equity CASH FLOW FROM OPERATIONS CASH FLOWS FROM INVESTING 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 6,478.07 6,266.80 6,523.42 6,112.35 5,834.81 5.353.95 3.4% -3.9% 6.7% 4.8% 9.0% 5.7% 3.058.21 2.813.67 2.676.61 2.470.83 2.409.56 2.249.79 47.2% 44.9% 41.0% 40.4% 41.3% 42.0% 580.18 490,01 431.23 434.16 397.24 442.54 9.0% 7.8% 6.696 7.19 6.896 8.3% 314.25 260.09 228.57 208.49 181.68 227.72 4.9% 4.2% 3.5% 3.4% 3.1% 4.396 6.29 5.6% 5.2% 6.696 19.3% 19.2% 21.1% 20.5% 22 22.3% 33.5% 573.25 650.97 542.85 384.06 – 10.42336.16 -367.08 -237.97 333.68 176.94 120.45 140.96 7.19 REEBOK INTERNATIONAL LTD (MILLIONS OF DOLLARS) FISCAL YEAR ENDING NET SALES Sales Growth GROSS PROFIT Gross Profit Percentage OPERATING INCOME Operating Income Percentage NET INCOME Return on Sales Return on Assets Return on Equity CASH FLOW FROM OPERATIONS CASH FLOWS FROM INVESTING 12/31/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 3.785.28 3.485.32 3.127.87 2.992.88 2.865.24 2.899.87 8.6% 11.4% 4.5% 4.5% -1.2% -10.1% 1.498.00 1.338.21 1.197.67 1,098,38 1,085.55 1,115.96 39.6% 38.4% 383 36.7% 37.9% 38.5 294.35 252.36 215.45 184.44 170.17 144.01 7.54 72 6.9% 6.29 5.9% 5.0% 192.43 157.25 126.46 102.73 80.88 11.05 5.196 4.5% 4.0% 3.49 2.85 0.4% 7.99 7.9% 6.8% 6.7% 5.5% 0.7% 15.8% 15.2% 14.3% 1434 13.3% 2.1% 175.66 135.44 224.10 176.24 183.12 281.63 -255.18 44.48 -27.61 -27.344 10.80 -51.20 Source: Theme Owe Rentalytic. Exhibit 5 Selected Capital Market Data Nike's common stock price per share (May 31, 2004) Nike's equity beta (from Value Line, August 13, 2004) Market risk premium (from Dimson, Marsh and Staunton) Shares outstanding in millions (May 31, 2004) Nike's long-term debt rating (Moody's) Yield to maturity on A-rated debt Yield to maturity on Baa-rated debt Yield to maturity on 30-year Treasury Bond First call consensus estimates sales growth rate in 2005 First call consensus estimates sales growth rate in 2006-2009 $71.05 0.90 5.00% 263.1 A2 6.02% 6.47% 4.80% 9.7% 6.8%

 

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